Marine Midland Bank, N.A. v Koch

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Marine Midland Bank, N.A. v Koch 2009 NY Slip Op 33448(U) November 10, 2009 Supreme Court, New York County Docket Number: 100613/09 Judge: Eileen Bransten Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [* 1] SUPREME COURT OF THE STATE OF NEW YORK NE\V YORK COUNTY: PART THREE MARINE MIDLAND BANK, N.A., Index No.: 100613/09 Motion Date: 7/22/09 Motion Seq. No.: 002 Petitioner, - against - RICHARD F. KOCH, RICHARD F. KOCH d/b/a KOCH REALTY CO., LEONARD MAGGIO, \VHALENECK ENTERPRISES, INC., and 3010 WHALENECK REALTY CORP., Respondents. BRANSTEN, J.: In this turnover proceeding, petitioner Marine Midland Bank, N.A. ("Marine Midland") seeks an order directing respondents W~aleneck Enterprises, Inc., 30 l 0 Vlhaleneck Realty Corp. and Leonard Maggio (collectively the "Whaleneck Respondents") to turn over any shares in the Whaleneck corporations that are owned by judgment-debtor Richard F. Koch ("Koch"). Long ago, Marine ~1idland obtained a multi-million dollar judgment against Koch and Richard F. Koch d/b/a Koch Realty Co. (collectively the "Koch Respondents"). In this motion, Marine Midland seeks to amend the caption to reflect thatthe judgment was assigned to 645 \V. 44th St. Associates C'Associates,'), which should be the named petitioner. Respondents do not object to amendment of the caption, which was granted in an August 25, 2009 Order, but they cross-move to dismiss the petition based on improper FILED Nov 13 2009 NEW YORK t"'l"\l HUTV r1 cicurc: nc'c1rc [* 2] Index No.: 100613/09 Page 2 lvfarine 1\1idland Bank v Koch service. Additionally, the Koch Respondents cross-move to dismiss on the grounds of champerty. Petitioner opposes the cross-motions. Background In 1992, Marine Midland commenced an action against the Koch Respondents on a commercial mortgage on a building located at 645 West 44th St. in Manhattan. Judgment was entered against the Koch Respondents in 1993. Thereafter, Marine Midland made several efforts to detenni ne the whereabouts of the Koch Respondents' assets. In 1994, Marine Midland assigned the judgment to Associates, which purchased the building. In 2007, in a matter captioned 645 West 44th Street Assoc. v. Koch ( 113873/2007), Associates, as assignee, moved to renew the judgment and for summary judgment. This Court (Gischc, J.) granted Associates summary judgment against the Koch Respondents, entitling it to $3,539,221.95 exclusive of interest. In this proceeding, Associates, as Marine Midland's assignee, seeks to recover Koch's shares in the Whaleneck entities. The Koch Respondents, who were entitled to notice of the collection eff011, are named as respondents in addition to the Whalcneck Respondents. On February 9, 2009, the \Vhaleneck Respondents served their Verified Answer, which included lack ofjurisdiction "for failure of proper service" as their second affirmative defense (Mushkin Aff., Ex. 1, at~ 9). Ten days later, on February 19, 2009, the Koch [* 3] Marine Midland Bank v Koch Index No.: 100613/09 Page 3 Respondents served their Verified Answer, which also included a lack-of-jurisdiction affirmative defense based on "failure to effectuate proper service of the Order to Show Cause and Petition" (Mushkin Aff., Ex. B, at~ 9). In March 2009, the \Vhaleneck Respondents moved to disqualify Marine Midland's counsel. The motion was subsequently denied. In early May 2009, the Koch Respondents made this cross-motion to dismiss the petition on the ground that personal jurisdiction is lacking because they were not properly served. Specifically, they contend that this court required Hpersonal service" of the order to show cause and accompanying papers, including the petitio~1, by January 23, 2009 (see Koch Affidavit, Ex. A). The Koch Respondents assert that Marine Midland "caused documents to be purportedly served upon Respondent Richard F. Koch's son at a location that is neither Richard F. Koch's place of residence nor place of business" because Koch lives in Florida (Memorandum of Law in Support of Cross-Motion ["Koch Mem"] at 2). The Koch Respondents also seek dismissal based on Judiciary Law§ 489, which prohibits champerty, * arguing that the "primary, if not sole, purpose of the assignment of the judgment ... was to commence litigation" (Koch Respondents' Memo at 4 ). • Champerty is the "act or fact of maintaining, supporting or promoting another person's lawsuit" (see Black's Law Dictionary 224 [7th ed. 1999]). [* 4] Marine Midland Bank v Koch Index No.: 100613/09 Page 4 The Whaleneck Respondents in early May also cross-moved for dismissal. They maintain that Maggio was never personally served with the Order to Show Cause and that incredibly there is only a three-minute time difference between when Koch was served and when he was served at a different location (Maggio Aff at , 10). The Whaleneck Respondents also argue that service was completed too ]ate-.. Iong after the court-imposed deadline. Petitioner responds that the cross-motions to dismiss based on improper service are untimely as they were made more than 60 days after service of respondents' answers. Petitioner also maintains that service was proper because the order to show cause did not require personal delivery, and thus, any of the methods contemplated by CPLR 308 were appropriate. With respect to champerty, petitioner urges that the Koch Respondents are raising the argument too late since Associates already obtained summary judgment against them and the assignment was upheld. On reply, the Koch Respondents submit that their cross-motion is timely because they served an amended answer on March 9, 2009 and moved within 60 days on May 8th. Respondents further contend that their motion cannot be time barred based on CPLR 406, which provides that motions "in a special proceeding, made before the time at which the petition is noticed to be heard, shalJ be noticed to be heard at that time." [* 5] Index No.: 100613/09 Page 5 .fvfarine Midland Bank v Koch Analysis CPLR 321 l(c) provides that an objection that a notice of petition and petition have not been properly served "is waived if, having raised such objection in a pleading, a pa1iy does not move for judgment on that ground within sixty days after serving the pleading, unless the court extends the time upon the ground of undue hardship." The rule equally applies when a petition has been served along with an order to show cause. A contrary result would undermine the 60-day rule (see Siegel, Practice Commentaries, McKinneys Cons. Laws ofNY, Book 7B, CPLR 3211 :59, at 91 [2005] ["practically speaking', 60-day deadline should apply to answer to a petition accompanying an order to show cause as it is "clear that the legislature intended to have the special proceeding governed by (CPLR 3211 [c ])]). The whole point of requiring a motion based on improper service within 60 days or deeming the defense waived is to ensure prompt adjudication of service as a threshold matter. Here, the Whaleneck Respondents affinnativcly sought relief from this Court--they moved to disqualify petitioner's counsel, albeit unsuccessfully--and it would make absolutely no sense to pem1it patties to actively litigate a matter only to later claim entitlement to dismissal because they were never properly served. It would a I.m make little sense to re-start the 60- day clock from an amended answer. The Legi&lature authorizes 60 days from service of an answer to challenge the propriety of service. Once those 60 days lapse so does the time to contest service absent a court-authorized extension of time. [* 6] Index No.: 100613/09 Page 6 1\lfarine Midland Bank v Koch Respondents did not move to dismiss on the basis of improper service within 60 days of serving their original answers containing the defense as required by CPLR 3211 (e). Nor did they seek an extension of time for undue hardship. Thus, their motions must be denied (see Farkas v Chase Manhattan Bank, 290 AD2d 253, 254 [t st Dept 2002]). CPLR 406 does not change the result. That provision authorizes abbreviated notice in the context of motions brought in the course of special proceedings and requires that they be heard at the same time as the hearing on the petition to ensure expedition. CPLR 406 was adopted to reduce the time otherwise provided for motions in the context of a special proceeding, not to enlarge time frames or authorize delay. In fact, "aside from abbreviated notice, the usual CPLR rules of motion practice apply in a special proceeding," and reliance on CPLR 406 is completely misplaced (see Alexander, Practice Commentaries, McKinneys Cons. Laws ofNY, Book 7B, CPLR 406, Rt 48 l [2001]. To the extent ~he Koch Respondents seek 1fsmissal based on champerty, they should have raised that argument in the 2007 Proceeding before Associates was awarded summary judgment and became legally entitled to recover the judgment. Accordingly, it is ORDERED that the motion to amend th~ caption is grar~ted without opposition in accordance with the Order signed by this Court 0,1 Aligust 25, 2009; and it is further ORDERED that the caption is amended and shall read: [* 7] Index No.: l 00613/09 Page 7 lvfarine A1idland Bank v Koch SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY: PART THREE 645 W. 44TH ST. ASSOCIATES, as assignee of MARINE MIDLAND BANK, N.A., Index No.: 100613/09 Petitioner, - against- RICHARD F. KOCH, RICHARD F. KOCH d/b/a KOCH REALTY CO., LEONARD MAGGIO, \VHALENECK ENTERPRISES, INC., and 3010 WHALENECK REAL TY CORP., ~espondents. -----------------------------------------------------------------; and it is further ORDERED that respondents' cross-motions to dismiss are denied. This constitutes the Decision and Order of the Court. Dated: New York, New York November 10, 2009 ENTER: ' FILED Nov 13 2009 NEW YORK COUNTY CLERK9S OFRCE (? C'*\ ""- \~h-~ Hon. Eileen Bransten

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